5 Reasons We Make Poor Decisions

I just read a great report from Eric Olive on how and why we make decisions, especially bad ones. Here’s a summary of the report and the trouble we can get ourselves into:

People don’t like uncertainty. It makes us uncomfortable. So we tend to ignore important information and either make a bad decision or don’t make any decision at all.

People tend to make decisions that are in line with what they already believe. We filter information and just don’t let in data that conflicts with our view of the world.

People are overly optimistic about the future. Even though we have experience with things going wrong, or taking longer than we think they will, we tend to look to the future with rose-colored glasses.

People are influenced by confidence. If someone is confident then we believe them. And if/when we are confident that’s when we take action.

We think we can fool people but we often end up fooling ourselves. Eric gives an interesting example of how an executive in a corporation thought he could make it look like he was consulting his staff about some important decisions in the company, when he was really trying to manipulate the decision to go his way.

Most of our decision-making happens unconsciously, so it’s difficult to prevent these errors. Eric says your best strategy is to put some procedures in place while you are making decisions that force you from automatic mode (what Daniel Kahneman calls System 1 thinking) into deeper consideration mode (Kahneman’s System 2 thinking). Here are two examples of what you could do: 1) Enlist a skeptic to walk you through all the reasons why your plan is not realistic, or 2) Use the “pre-mortem” technique where you get your team together and imagine a scenario where you implemented the decision you are currently debating and it all goes terribly wrong. You ask the team to write out what made it go wrong.

It’s not easy to work around our unconscious mental processes! These tips from Eric just might work.

One Reply to “5 Reasons We Make Poor Decisions”

Hi! Susan, great article. Yes most of the time we make wrong decision because we think it will be beneficial on our side and not for the benefit of the business or if we like to manipulate our staff to make things goes our way. I had been reading a blog about business coaching successclub.com.au It talks about how to make right decision, set the right goals, focus and make the best strategies in our business.